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Hit by the Crisis Lukashenka Looks for Money and Strengthens the KGB

14 October 2011

Unable to deal with the economic crisis by economic means and fearing a revolution, Belarusian ruler Alyaksandr Lukashenka strengthens the KGB.

Last Thursday the Belarusian rouble fell sharply against the US dollar. Now the rate is 9,000 Belarusian rubles for one...

Unable to deal with the economic crisis by economic means and fearing a revolution, Belarusian ruler Alyaksandr Lukashenka strengthens the KGB.

Last Thursday the Belarusian rouble fell sharply against the US dollar. Now the rate is 9,000 Belarusian rubles for one dollar. In September, the rate was less than 8,000 rubles. The new fall clearly breached Lukashenka's promise that the Belarusian national currency would be strengthened.

Because of high inflation, wages and salaries are stagnating. Most Belarusians today earn two or three times less than they did a year ago. The situation with pensions is even worse as many retired people have to survive on less than 100 dollars per month.

The Belarus National Bank is trying to convince people to keep their Belarusian rubles. But no one trusts the national currency anymore. The Government cannot do much to strengthen the national currency because it has no money. On Thursday, Belarus asked Russia to postpone payments for natural gas and suggested paying for 2011 deliveries in 2012.

Earlier this week the Belarusian government asked five of the most profitable national companies, including Belaruskali or Druzhba Oil Pipeline, to quickly transfer a part of their profits to the so-called National Development Fund. Under normal circumstances, such payments would be due only after the end of the year.

The government also ordered Belarusbank, the largest financial institution in the country, to suspend offering loans for residential developers who plan to complete construction after this year. As a result, a lot of people are struggling to either find a huge sum to pay developers or give up building their own housing.

Although Lukashenka's rule seems today very vulnerable and fragile today, the opposition is still much weaker. No significant protests are taking place in Belarus today. The 'People's rallies,' called for by some opposition activists, took place on the 8th of October. But they looked more like a farce and were characterized by extremely poor attendance. However, it is difficult to blame the opposition.Opposition activists have had to deal with intimidation and outright violence for years.They were finally crushed after the last year presidential elections and the pressure is increasing.

As the economic clouds get darker, the Belarusian rubber-stamp parliament has almost secretly adopted new amendments to give more rights to the Belarusian KGB, which still keeps its Soviet name. The proposed amendments allow KGB officers to enter any private or public places whenever they wish and to use force almost without restrictions.

In addition, the new legislation puts an absolute ban on foreign grants and financial aid. That will certainly be a hard blow for media, political organizations or civil society which have virtually no resources inside the country. Last but not least, the new amendments introduce harsher punishments for organization of and participation in public protests, as well as broadening the definitions of 'spying' and treason.

Although there is no strong opposition, the Belarusian regime has serious reasons to be afraid. Lukashenka is probably running out of money. The Belarusian authorities were never able to generate or attract serious money. The regime's arms trade was more akin to a casino game than a sustainable business. Trade in petroleum products was more lucrative but sufficient only to satisfy regime insiders rather than the country as a whole.

The regime's poverty may turn even its employees against Lukashenka. And a tiny spark of discontent may turn into a real revolution. To avoid it, the Belarusian strongman needs to tighten the screws and find money as soon as possible. And that proves increasingly difficult. Neither Russia nor the West are ready to inject significant amounts into the Belarusian economy. Other solutions include selling the most valuable national assets such as potash deposits to the Russians and seeking help from China. Iran cannot help much.

So the Belarusian opposition will hardly be able to benefit. Parallels between Belarus and late Communist Poland and calls for a “Round Table” with the regime would not be accurate because Belarusian civil society is weak. The situation in Belarus looks more like late Ceausescu's Romania and their dubious revolution.

The Polish and Romanian regime changes in 1989 were worlds apart. In Poland, strong opposition and civil society forced a military ruler into negotiations which eventually led to establishing democracy and dismantling all essential institutions of the old regime. In Romania, with its non-existent opposition and civil society, the regime insiders just dragged Ceausescu out of the palace and killed him after a kangaroo trial. The old Romanian regime was able to delay a democratic transition for many years.

As many times before in the world history, the sultanistic regime in Belarus is evolving towards full-blown authoritarianism. But how long this authoritarianism will last depends in the first place on the opposition that badly needs to reorganize, and only then on external support.

Eastern Partnership Summit: the Results Can Encourage Lukashenka

EaP Summit in Warsaw

The results of the second summit of the Eastern Partnership say nothing new about the EU policy in Belarus and in Eastern Europe. As always, the EU leadership is busy with internal problems. In light of the financial collapse in Greece and the major financial problems in Eurozone countries, one should have not expected allocation of additional large sums on Belarusian issues for Eastern Partnership projects.

Rather, the summit confirmed that the development of cooperation in the framework of the Eastern Partnership will move very slowly. Fundamentally, the Eastern Partnership is still a deferred project for the EU.

The host of the summit Prime Minister of Poland Donald Tusk after his meeting with representatives of the Belarusian opposition said: "From our side there will be no concessions, no gestures of any kind towards Lukashenka's regime until all political prisoners are released".

There was not much discussion at the summit about what steps Lukashenka's regime should make to normalize its relations with the EU. The EU has already got used to the thought that normalization of relations was impossible while Lukashenka is in power. The real question was about taking some very small steps to change the current situation in relations for the better to some extent.

EU President Herman van Rompuy, urging the Belarusian authorities to establish dialogue with the EU, said: "We cannot support Belarus without seeing apparent progress in regard to respect of human rights in this country, and it means immediate release and exculpation of all political prisoners".

Statements by the representatives of EU bodies and member states implied that currently the EU demands towards Lukashenka's regime are limited de-facto to the release and rehabilitation of political prisoners. It was not specified, however, what is meant under the rehabilitation.

Donald Tusk also announced at the final press conference of the summit that its participants had approved a "Modernization Package for a Democratic Belarus". The package foresees a possibility of extending grants and loans to Belarus by international institutions, investment stimulus and mechanisms for the stabilization of the Belarusian currency, and the simplification of the visa regime.

According to the Prime Minister of Poland, the EU is ready to extend up to nine billion dollars to Belarus in exchange for the fulfillment of certain conditions: full amnesty and exculpation of the political prisoners, opening of negotiations with opposition and holding the parliamentary elections in accordance with the OSCE standards.

One gets the impression that Tusk voiced the maximum demands to Lukashenka's regime, and the EU does not really believe that they can be met.

At the final press conference, the EU President also said that the release of the political prisoners was the first condition for resuming cooperation with Belarus.

Belarus' ruling elite still does not see much of a 'carrot' in the Eastern Partnership projects and other EU proposals, or anything worth pushing Lukashenka to any significant steps towards the EU and the West and intensifying the internal dialogue on expanding cooperation with the EU.

Currently, the demands of the EU to carry out democratic reforms and to hold the parliamentary elections in accordance with the OSCE standards enter are in contradiction with the interests of the ruling elite. In Belarus, the process of the carving-up (appropriation) of a significant part of state property is gaining momentum. The nomenklatura needs its own convenient laws, its parliamentarians, judges and mass media in order to keep competitors both the West and Russia out of Belarus.

The figure of nine billion dollars, announced by the Prime Minister of Poland, is so far the biggest promise from the West (if the EU is indeed ready to allocate this amount). But it is still less attractive compared to what the nomenklatura can get as a result of the carving-up of a significant part of state property.

Andrei Liakhovich

Andrei Liakhovich is a contributing author. He directs the Center for Political Education in Minsk.